District 5 Diary

Saturday, September 10, 2016

Train to nowhere

...Critics have dubbed the high-speed rail project the "train to nowhere," and it was easy to see why...The rest of the story is the astonishingly widespread political opposition to the train by California voters these days, even though 53 percent of them approved the idea when it was on the state ballot in the November 2008 election.

The opposition spans ideological left and right and demographic rich, poor, and middle-class: from wealthy Silicon Valley technocrats horrified that the ultra-fast rail lines, with overpasses only every 10 miles or so, would wreck their leafy, bicycle-friendly upscale-suburban neighborhoods, to Latino-majority working-class towns in Southern California's San Fernando Valley that would be split in half by the train corridors, to equestrians in the San Gabriel Mountain foothills who would see their horse trails destroyed and environmentalists concerned about wetlands destruction in Northern California and threats to wildlife and endangered plant species in Southern California's Angeles National Forest, through which several of the proposed train routes would plow.

Thanks to this near-universal hostility, the CHSRA has so far succeeded in acquiring only 60 percent of the 1,300 parcels of land that it needs just to run those 130 miles of track from Madera to Shafter. Meanwhile, polls conducted from 2013 to 2016 have consistently shown that at least 52 percent of Californians want the state to ditch the high-speed rail project entirely and use the 2008 bond funds for something else, possibly for water storage or for beefing up conventional rail and public-transportation systems in the traffic-clogged Los Angeles and Bay Area "bookends" of the projected bullet-train system...

It was on the farms and in the smaller towns outside of Fresno that nearly unanimous opposition to the bullet train appeared, along with widespread complaints that CHSRA's compensation offers are far from adequate, reflecting what many residents regard as city-slicker disdain for agriculture and a lack of understanding of the value of agricultural land and the way it is used.

Thanks to excellent soil, a long and sunny growing season, and a near-perfect day-to-night temperature ratio, the San Joaquin Valley and its northerly extension, the Sacramento Valley, yield around 300 different crops, about a quarter of the fruits and vegetables grown in the United States.

There was widespread suspicion among valley residents that one of the ultimate goals in routing the bullet train through there was to develop the vast fields into low-cost commuter subdivisions for Los Angeles, San Francisco, and Sacramento, essentially terminating the valley's agricultural viability...

But the peninsula is also the home of Silicon Valley and its wealthy towns that house tech billionaires and their well-compensated employees. They dreaded the bullet train for reasons similar to those of the San Joaquin Valley farmers: They didn't want 200-mile-an-hour trains running high above grade and, shielded for miles by nearly impenetrable barriers, hurtling through their tree-shaded suburbs at five-minute intervals, lowering their multi-million-dollar property values...

It's easy to mock the consternation of the bien-pensant Silicon Valley billionaires at the prospect of actually having to live with the bullet trains that have been a longtime pet project of auto-contemptuous progressives. And it's hard, too, not to be cynical about the peninsula dwellers having managed to secure an exemption from elevated rail-beds for their high-end communities that Californians with less wealth and clout—such as the farmers of the San Joaquin Valley—cannot buy.

Yet the concerns of those upscale peninsula residents have exactly mirrored the concerns of middle-class and working-class California communities in the path of the train: that the close-knit towns in which they live will be split irrevocably.

At public meetings earlier this year, peninsula residents complained that the current plan to run the CHSRA's contemplated 20 bullet trains per hour at grade would entail shutting down some of the 42 grade crossings along the Caltrain commuter line that give cars, trucks, buses, bicycles, and pedestrians convenient routes across the tracks...

The truth about "mixed-use" development

As far as trends in retail real estate development go, none during my 30 years in the industry has been more counter-productive or government-driven than residential over retail mixed-use development (RRMU).

Pick just about any Bay Area city and you will easily identify any number of RRMU projects that have been proposed, entitled and/or developed over the past ten years. And with rare exception, these projects suffer the same ills---relatively high vacancy rates, substantially below market rents, poor credit tenancies, and a high turnover rate of the brokerage firms that try, with little success, to lease what is un-leasable.

Don’t get me wrong---as a design concept RRMU works beautifully…in Paris. And in Manhattan. And therein lies a big part of the problem. City planners and city councils across Northern California have revealed an inferiority complex to major urban markets around the world and tried to force feed this utterly urban product type into sprawling suburbs from Concord to Novato to San Jose. Only guess what? The most important ingredient is missing---concentrated, massive, pedestrian populations.

Retail developments thrive and enjoy competitive demand for their vacancies only when merchants and restaurants can succeed. The ingredients for the retailer’s success are universally known and proven: easy access, convenient parking, strong co-tenants, and proximity to a desirable trade area.

In the Bay Area’s primarily suburban sub markets, well over 90% of shoppers get to their shopping and dining destinations by car. Only one of the Bay Area’s nine counties, San Francisco, can make a legitimate claim to having the kind of fundamentals that support RRMU, and even then only in select neighborhoods

But the retail landscape in every other Bay Area county is overwhelmingly suburban in nature and comprised of shopping centers, power centers, and regional malls with abundant parking, or traditional downtowns that cater to auto-oriented shoppers via street parking and proximate parking structures.

Against successful and entrenched assets like these, with their ease of parking, strong anchor tenants and broad offerings, RRMU projects seek vainly to attract tenants who soberly see futures with no parking, no reliable anchor tenants or the traffic they generate, and, above all, no customers.

The Bay Area’s numerous submarkets fail to meet the fundamental criteria for RRMU for more reasons than lack of residential density. Remember that the European and east coast markets where RRMU has historically evolved are typically centuries old and have a far more restricted infrastructure of freeways, parking and roadways, which were all necessary factors in the natural growth of RRMU in those markets. RRMU worked in these markets because at the time that they developed, there was no alternative.

Infrastructure in Northern California however is based on a 20th century standard, which gave rise to suburbs and the retail projects that serve them, thus eliminating the critical cause & effect chemistry needed for successful RRMU. Government elites have ignored these realities while advancing their Euro model for our communities.

Rapt by the dogma of New Urbanism, our municipal planners have uniformly ignored the fact that retail by its very nature likes to congregate. In retail lease planning, this reality is expressed through anchor tenants, larger formats and critical mass. Yet New Urbanism’s RRMU designs plug its ears and closes its eyes to this essential truth...